Thank you to the members of the Charter Revision Commission for the opportunity to submit testimony and answer questions on the City’s procurement and contract registration processes. Having served as Deputy Comptroller for Contracts and Procurement for the past five years, and having spent several years prior working at the Mayor’s Office of Contract Services, I have seen our contracting system work within two different agencies and under four different administrations. This has given me a unique vantage point to assess this process and think through possible improvements, which I am pleased to share with you today.
Let me begin by providing some context on our procurement system: in Fiscal Year 2018, New York City bought over $19.3 billion worth of goods, services, and construction, making the City one of the largest procurement jurisdictions in the world. But despite the critical role procurement plays in keeping New York City running, our procurement process can be notoriously slow, bureaucratic, and opaque. Our inefficiencies hurt the vendors with which we contract, causing delays in contract implementation, driving up project costs and potentially causing real financial harm, particularly for non-profits, M/WBEs and smaller vendors.
The weaknesses in our procurement process, however, hurt us as a City. Every contract delay that leads to increased costs hurts our bottom line. Vendors pass those costs right back to us, as expenses increase over the life of a project or before a project even starts, by submitting an inflated cost estimate to the City in anticipation of a protracted contract registration process.
The City is well aware of its procurement problems and is attempting to address some of its inefficiencies through PASSPort, a technology tool that will streamline aspects of the system. However, without creating real accountability and transparency throughout the system, we will not get to the heart of the problem – the exceedingly long amount of time it takes to solicit, award, negotiate, execute, review and submit a contract for registration, and the lack of visibility vendors and the public have throughout the process.
Currently, there are no timelines for the numerous City agencies involved in contract oversight to complete their work. It can take months or even years from the time a vendor is awarded a contract until the City submits it for registration to the Comptroller’s office, which legally allows a vendor to be paid. After the contracting agency decides what it needs to procure, up to five other City agencies perform oversight functions before the contract is submitted to the Comptroller’s Office for registration: the Mayor’s Office of Contract Services, Office of Management and Budget, Law Department, Department of Investigation and Department of Small Business Services. None of these agencies are required to perform their duties within a specified timeframe and there is no visibility into how long each agency takes to perform their tasks. As a result, the process lacks standardization and there is no way to learn how long it might take for any particular contract to be registered.
The scope of the problem has been documented in numerous reports by the Comptroller’s Office. In FY18, ninety-six percent of the contracts registered by our office were registered within the initial 30 day review window. However, we found that 80 percent of all new and renewal contracts submitted to the Comptroller’s Office for registration arrived after their start date had already passed. Forty percent of these contracts were late by six months or more. When looking only at human service contracts – a sector that is particularly hard hit by contracting delays – that number increased to 89 percent, with 52 percent of those contracts arriving for registration more than six months late. And when looking at M/WBEs, we also found that 69 percent of new and renewal contracts arrived at the Comptroller’s Office for registration after the contract start date had already passed, with 25 percent of these contracts arriving at least 90 days late.
These statistics have adverse impacts on City vendors. Some vendors, particularly construction firms, may elect not to start work until their contract is registered to avoid working at their own risk. This can mean slowed progress on City projects and costs that rise with time and delay. Other contractors may refuse to even bid on a contract due to the slow pace of City procurement, narrowing the pool of contractors the City can draw on and limiting competition. Non-profit organizations may not have the option of waiting to begin contracted work. This can mean taking bridge loans from the City, seeking other loans, or potentially having cash flow problems that threaten the stability of the organization and ultimately the services they provide to the most vulnerable among us.
Our office’s recommendations to tackle this problem are straightforward, and we have been saying it for years.
First, the City should institute strict timeframes for City agencies with an oversight role in the procurement process to complete their tasks. The Comptroller’s Office is currently the only agency with a role in the City’s procurement process that performs its duties within a specified timeframe as required by the New York City Charter.
Second, the City should create a transparent contract tracking system that would allow vendors to view the status of their contracts. Vendors that do business with the City of New York have very limited visibility into the contracting process. The only real transparency in the contracting process happens when contracts are submitted to the Comptroller’s office and the registration status automatically appears in checkbooknyc.com, the Comptroller’s transparency website for City spending and contracts. To bring more transparency to the process, the City should create a tracking system that allows vendors to follow their contracts throughout each stage of the procurement process. With such a system, vendors would be able to see if their contracts are under review at the Mayor’s Office of Contract Services, the Office of Management and Budget, or Corporation Counsel, and track how much time each agency is taking to execute their tasks.
The Charter Revision Commission is empowered to make changes to achieve transformative reforms and this is something that the City’s procurement process desperately needs. I urge you to consider these proposals as part of the changes the Commission will put forward to revise the Charter.
Thank you for your attention to this crucial issue.